THE PRESIDENT: Thank you, all. Good morning. I thank you for coming. I
apologize to my friend -- he likes to sleep in. (Laughter.)

I really do want to thank you all for adjusting the schedule. Right after
the speech I'm going to get on an airplane and fly to Tennessee. I'll be
taking the prayers of the American people to those who suffered from the
devastating tornados. (Applause.)

Mr. Leader, thank you for that introduction -- and I appreciate your
outstanding leadership in the United States Senate. (Applause.) You know,
Mr. Leader, I used to think that leading a group of strong-willed senators
was one of the toughest jobs in the country. I may have found one even
tougher one: father of the bride. (Laughter and applause.) You know, I
told Laura I was going to say that and she said, well, you might add
another one: son-in-law to the President. (Laughter.)

I thank you for the invitation. I appreciate the fact that you've invited
our candidates to your forum; and thank you for the hearing you gave them.
(Applause.) These are good, honorable people. And I appreciate the fact
you invited Vice President Cheney here. (Applause.) He is the best Vice
President in history. (Applause.) Mother may have a different opinion.
(Laughter.) But don't tell her I said this, but my opinion is the one that
counts. (Laughter and applause.)

Since I spoke with you last, some things have changed. It seems like my
hair is little grayer. (Laughter.) And my jokes are a little older. And
some say my speeches are a little windier. Some things haven't changed:
the principles I believe in and my deep, abiding faith in the American
people. (Applause.)

It just doesn't seem all that long ago that David invited me here, but it's
been about seven years, and during that time we have stood together and we
have advanced a philosophy of freedom and responsibility that's made our
nation a better place and a stronger place. And today I want to talk to
you about what you and I have achieved together, what it tells us about the
stakes in the year ahead, and why it is so important that we keep the White
House in 2008. (Applause.)

I thank the leader, David Keene. He's a good guy. You know, this is the
35th -- yes -- anniversary, which means he started the deal when he was 15.
(Laughter.) At least that's what he claims. (Laughter.) But thank you
for your leadership. I thank you for your board. I've got a lot of
friends up here at the head table and a lot of friends in the audience, and
I really do appreciate what you've done.

AUDIENCE MEMBER: We love you, George.

THE PRESIDENT: Well, thank you. (Applause.)

A lot has happened over eight years -- that was the last time I spoke to
you, was eight years ago. And we've seen vigorous debates -- a lot of
debates -- on nearly every conceivable issue: matters that affected the
prosperity and peace.

Our views are grounded in timeless truths. During these debates we stuck
to timeless truths. We believe that the most reliable guide for our
country is the collective wisdom of ordinary citizens. (Applause.) We
believe our culture benefits from a diversity of faith, a respect for
values, and the guidance of a higher power. (Applause.) We believe in
personal responsibility. (Applause.) We believe in the universality of
freedom. We believe our nation has the right to defend itself -- even if
sometimes others disagree. (Applause.) And we believe America remains a
force of good in our world. (Applause.)

There's another philosophy, and it's advanced by decent people who see the
world differently. They tend to think Washington has the answers to our
problems. They tend to believe our country only succeeds under the
expansive federal government. They tend to be suspicious of America's
exercise of global leadership -- unless, of course, we get a permission
slip from international organizations. (Laughter.)

Over the past seven years, we have engaged this opposition with a clear and
consistent philosophy. We didn't take polls to decide what to say. We
didn't seek the advice of editorial pages to decide what to think. And we
darn sure didn't seek the approval of groups like Code Pink and MoveOn.org
before deciding what to do. (Applause.)

We applied our philosophy on issues relating to economic prosperity. When
I took office, we inherited a recession -- and then we acted. We were
guided by this principle: the best way to help our economy grow is to
leave money in the hands of those responsible for our prosperity.
(Applause.) That, of course, would be the American people. And so with
your support, we passed one of the largest tax cuts in American history --
and then we cut taxes again. (Applause.) In all, we delivered nearly $2
trillion in tax relief over the past seven years.

Our critics wanted a different approach. They believed that the best way
to keep the economy -- to help the economy was to keep taxes in Washington
and expand the size and scope of the federal government. One columnist
wrote this -- one columnist said this, "Tax cuts -- any tax cuts -- are the
wrong way to go." A prominent newspaper said my administration was on a
tax cut rampage and called our tax relief unfair and unaffordable. A think
tank expert called our tax relief a reckless gamble.

Despite these dire predictions, the tax cuts we passed contributed to a
record 52 months of job creation. (Applause.) They helped produce strong
economic growth -- and the increased revenues from that growth have put us
on track to a balance our budget by 2012. (Applause.) Here is the bottom
line: tax relief works. (Applause.)

We're in a period of economic uncertainty, and we've acted again. I want
to thank the members for passing a good piece of legislation which I will
sign into law next week. I want you all to understand that this bill
reflects our principles. It is robust. It is pro-growth. It stimulates
business investment. And it puts money into the hands of American
consumers. (Applause.)

In the longer run, the best way to make sure that our economy continues to
grow is to make the tax relief we passed permanent. (Applause.)
Unfortunately -- unfortunately, the other side still hasn't learned the
lessons. They want to let the tax cuts expire -- and some are claiming, of
course, this isn't a tax increase. Yet if they have their way, 116 million
American taxpayers would see their taxes rise by an average of $1,800.
Listen, I'm not known for my English -- (laughter) -- but in my way of
speaking it sure sounds like a tax increase to me. (Laughter and
applause.)

You and I know the American people are not under-taxed. The problem is
Washington spends too much of your money. (Applause.) One of the things I
have done is I have set priorities. And you must understand my passion
about protecting America. My number one priority is to protect you. And
after 9/11, we have substantially increased spending on defense,
intelligence, and homeland security. And we will continue to provide for
our troops; we will make sure the men and women who wear the uniform have
the best and strongest support they need to do their job. (Applause.)

And so we've worked hard to make sure we hold the line on spending in other
areas. For five years in a row, my budget requests have kept the growth of
non-security discretionary spending below the rate of inflation. I set
clear spending limits, told the Congress I was going to veto them if they
-- veto bills if they exceeded those spending limits. The
Democratically-controlled Congress, at the end of last year, cut spending
plans by billions of dollars. Last week, I proposed a budget that
terminates or substantially reduces 151 wasteful or bloated programs.
Those programs total more than $18 billion. And if Congress sends me
appropriations bills that exceed the reasonable limits I have set, I will
veto the bills. (Applause.)

Last month I issued an executive order that directs federal agencies to
ignore any future earmark that is not actually voted on by the United
States Congress. (Applause.) This executive order will extend beyond my
presidency -- (applause) -- it will stay in effect unless revoked by a
future President. What that means is any President who wants to return to
the old ways of unaccountable and wasteful spending will get to do so
publicly. (Applause.) And if that happens, that President will have some
explaining to do. (Applause.)

In the long run, you and I know the greatest threat to our fiscal health is
the unsustainable growth of entitlement spending. We all know the painful
choices ahead if America stays on this path: massive tax increases, sudden
and drastic cuts in benefits, or crippling deficits. I have laid out
specific proposals to reform and strengthen these programs. On Social
Security, I took the issue head on -- that's what you expect a President to
do. I proposed a way to make this program solvent without raising taxes
and with personal saving accounts that will give individuals more control
over their retirement savings. (Applause.)

On Medicare and Medicaid, I sent Congress a budget this week that saves
nearly $200 billion over the next five years. (Applause.) I hear all the
talk from the other side on Capitol Hill about fiscal responsibility -- but
they haven't put any of their ideas on the table for programs. It is time
to stop talking, it is time for them to stop acting and not pass these
problems on to future Congresses and future generations. (Applause.)

On matters relating to our economy, our record is clear. You and I
succeeded in cutting taxes. We're reducing wasteful spending. On these
issues, both sides have made their case. The results are in. And they are
proving us right. (Applause.)

We applied our philosophy to questions affecting the moral fabric of our
nation. We believe that all human life is precious and deserves to be
protected. (Applause.) In 2001, I had a grave decision to make on the
question of embryonic stem cell research. I believed we could empower
scientists and researchers to discover cures for terrible diseases --
without crossing a moral line. (Applause.) So I authorized research on
existing stem cell lines, and stood against any effort to use federal tax
dollars to support the destruction of human life. (Applause.)

Our critics had a different view. They thought my defense of life was
short-sighted and harmful. When I vetoed two bills that sought to use tax
dollars to destroy human embryos, some academics described my position as
ridiculous and scientifically naïve. One publication predicted our plan
would not hold up over the long haul.

Then last November, scientists announced a landmark achievement. They
found a way to reprogram adult skin cells to act like embryonic stem cells.
(Applause.) This discovery has the potential to end the divisive debate
over stem cell research. It will allow us to expand the frontiers of
medicine, while maintaining a culture of life. (Applause.) In the coming
year, we will increase funds for this type of ethical research. And I will
continue to push for a ban on the buying, selling, patenting or cloning of
human life. (Applause.)

When I took office, our society was grappling with a troubling rate of drug
use among our children. A new generation of young people was in danger of
being swept up in a cycle of addiction, and crime, and hopelessness. We
believe people should be held responsible for their actions and we know
that people can change their behavior. Sometimes all it takes is the help
of a loving soul -- somebody who puts their arm around a troubled person
and says, I love you, can I help you. We also know that --

AUDIENCE MEMBER: (Inaudible.) (Laughter and applause.)

THE PRESIDENT: My soul is not that troubled, but thank you. (Laughter and
applause.)

We also know -- we also know that the drug crisis requires us to reduce
both supply and demand. And so in 2002, I set our country on an ambitious
goal: to cut drug use among young people by 25 percent over five years.
Critics didn't think that was possible. Some thought the drug war had
already failed. Some said we focused too much on interdiction and not
enough on treatment. An influential magazine and assorted commentators
wanted to declare defeat and legalize the drug trade. A left-leaning drug
prevention group said that our aggressive strategy was very unlikely ... to
produce any different result than we have seen so far.

We stood our ground. We worked with international partners to interdict
drugs into our country. We increased funds for drug treatment programs.
We helped move drug addicts from a culture of victimization to a culture of
responsibility. And we have gotten results. Since I took office, the
overall use of illicit drugs by young people has dropped 24 percent.
(Applause.) Marijuana use fell by 25 percent, steroid by a third, the use
of ecstasy by 54 percent. Methamphetamine abuse has plummeted by 64
percent since 2001. (Applause.)

On matters relating to America's moral compass, we have defended human
life. We promoted strong families. We confronted the crippling cycle of
drug dependency. We challenged the critics, the self-proclaimed experts,
and the status quo. Both sides made their case. The results are in. And
they're proving us right. (Applause.)

We've also applied our philosophy to issues of national security.
Six-and-a-half years ago, our country faced the worst attack in our
history. I understood immediately that we would have to act boldly to
protect the American people. So we've gone on the offense against these
extremists; we're staying on the offense -- and we will not relent until we
bring them to justice. (Applause.) We recognized that this is a war, not
just a matter of law-enforcement. We recognize that we're engaged in the
decisive ideological struggle of our time.

The first battle in this war against the extremists centered on Afghanistan
-- the 9/11 attackers had trained and planned in Afghanistan. We believed
our military could remove the Taliban from power and that we could help aid
the rise of a stable and democratic government.

Critics had a different view. One commentator said most Afghans would
oppose an American invasion and fight the foreign occupiers. Another
declared: "We're not headed toward a quagmire, we are already in one."
Another commentator scoffed: "Afghanistan as a democracy? Forget it."

Well, we stood our ground -- and we have seen the results. Al Qaeda lost
its terrorist camps in Afghanistan, and the Taliban was driven from power.
The Afghan people braved threats of violence to elect a new President and a
new parliament. Roads and hospitals are being built. Girls who were once
forbidden from going to school are now going to school. (Applause.)
America, 25 NATO allies and 15 partner nations are helping the Afghan
people secure their country. The Taliban, al Qaeda, and their allies are
on the run. Afghanistan has a long road ahead, but they have a future that
offers promise and hope. We're going to stand with the Afghan people,
we're going to help millions claim their liberty -- and we will always work
to make sure Afghanistan will never again be a safe haven for terrorists
and extremists who want to do us harm. (Applause.)

The war against our enemies also brought us to Iraq. Our coalition
confronted a regime that defied United Nations Security Council
resolutions, violated a ceasefire agreement, attacked its neighbors,
sponsored terrorism, and had a history of using and pursuing weapons of
mass destruction. Saddam Hussein was a threat to the United States and a
threat to the world. My decision to remove Saddam was the right decision
at the time -- and it is the right decision today. (Applause.)

Because we acted, 25 million Iraqis are free. We've seen them go to the
polls. We've seen them elect a representative government. We've also seen
an enemy determined to roll back this progress through horrific acts of
violence designed to pit Iraqis one against another.

One year ago, things were not going well in that country. Terrorists and
extremists were succeeding in their efforts to plunge Iraq into chaos. You
see, they wanted to deny Iraqis their liberty -- they can't stand freedom;
they wanted to establish safe havens in Iraq from which to launch attacks
against America and its allies. I strongly believe that America's security
and peace in the world depend upon defeating this enemy. (Applause.) So
we reviewed our strategy. Things weren't working, I need to know why and
what it would take to make things better. And that's why you review a
strategy.

I made up my mind. I listened carefully to a lot of folks. And I decided
to send more troops into Iraq -- (applause) -- in a dramatic policy shift
-- (applause) -- and the policy shift has become known as "the surge."

Our critics had a different view. They looked at rising violence in Iraq
and declared the war was lost.

AUDIENCE: Boo!

THE PRESIDENT: Some concluded the surge had failed EVEN before it had
fully begun. Two foreign affairs experts proposed, "a well-managed defeat
... to boost U.S. credibility."

We stood our ground -- and we're seeing Results. (Applause.) A year after
I ordered the surge of forces, high profile terrorist attacks in Iraq are
down, civilian deaths are down, sectarian killings are down. U.S. and
Iraqi forces have captured or killed thousands of extremists in Iraq,
including hundreds of key al Qaeda leaders and operatives. (Applause.)
There is more work to be done. It takes a while for young democracies to
take root -- but reconciliation is taking place. I recognize the progress
in Iraq is fragile and there's going to be tough days ahead. Yet even the
enemy recognizes the progress we're being [sic] making. They recognize
they're on the wrong side of events. They are disheartened. They are
demoralized. And they will be defeated. (Applause.)

We can have confidence in Iraq's ultimate success because we believe in the
transformative power of freedom. We believe there is an Almighty God.
(Applause.) And a gift of that Almighty to every man, woman and child on
the face of this Earth is freedom. (Applause.) We have seen that free
societies become peaceful societies. We know that a free Iraq will be a
friend of America, an ally in this war against these extremists, and a
source of hope and stability in a dangerous part of the world. (Applause.)

We'll fight the enemy overseas, so we do not have to face them here at
home. (Applause.) And as we do so, we must take measures to protect
America, the homeland. We must give our intelligence officials the tools
they need to uncover terrorist plots and prevent new attacks. (Applause.)
And one of the most important tools is the ability to monitor terrorist
communications. (Applause.) My most important job is to protect the
American people. In order to do that job, we need to know who the
terrorists are talking to; we need to know what they're saying; we need to
know what they're planning. So Congress passed the Protect America Act.
This law modernized an outdated surveillance law and closed dangerous gaps
in our intelligence.

Now, critics had a different view. One liberal interest group called the
law an end run around the Constitution. Others falsely claimed
law-enforcement officials wanted to spy on Americans. Still another summed
up the initiative as, "a groupthink travesty."

We countered these critics -- and we stood our ground. Our ability to
monitor the communications of terrorists overseas has helped us gain
crucial elements on terrorist cells, and helped keep our country safe.
(Applause.) The Protect America Act is working. The problem is that
Congress set the law to expire one week from tomorrow. I don't think the
al Qaeda threat is going to expire one week from tomorrow. (Laughter.)
Congress must ensure the flow of vital intelligence is not disrupted.
Congress must pass liability protection for companies believed to have
assisted in the efforts to defend America. (Applause.) The time -- the
time for temporary fixes has ended. Congress must pass this law -- and
they must pass it now. (Applause.)

On matters of war and peace, we have taken the fight to our enemies abroad
and we are defending our people here at home. We're standing with new
partners in Afghanistan and Iraq to help them build free nations. We
refused to yield when the going got tough. And when the history of our
actions is written, it will show that we were right. (Applause.)

We will face other challenges ahead that will require new energy and before
long, new leadership. I'm absolutely confident, with your help we will
elect a President who shares our principles. (Applause.) As we take on
the challenges, we must be guided by the philosophy that has brought us
success. Our policies are working. The American people support our points
of view. They share our philosophy.

And consider our advantage on other great questions before us. On health
care, one side says we should expand the federal government's control over
your private medicine. You and I say we should expand access to health
care, empower consumers to make choices, and ensure that medical decisions
are left in the hands of patients and their doctors. (Applause.)

On education, one side says -- one side says we should spend your tax
dollars without measuring whether or not our children are actually learning
to read and write and add and subtract. You and I believe in
accountability. We believe parents should have more options. And we
believe in liberating children from failing public schools. (Applause.)

On the rights of the unborn -- the most vulnerable among us -- one side
supports abortion on demand. You and I believe in the worth of every human
being, the matchless joy of adoption, and the right to life. (Applause.)

On the federal judiciary, one side says we should confirm judges who
believe in the "living Constitution" -- which basically means they can make
up laws as they go along. I say we need judges who respect our values, do
not follow the political winds and revere the plain meaning of our
Constitution. (Applause.) We need more judges like John Roberts and Sam
Alito. (Applause.)

On America's role in the world, some believe that our nation is often the
cause of global turmoil -- a mentality once called "Blame America First."
You and I believe that America is a leading light, a guiding star, and the
greatest nation on the face of the Earth. (Applause.)

You see, I know of America's greatness because I get to see it up close,
and it is a privilege to see it up close. I see it in the foot soldiers in
the armies of compassion, who perform acts of kindness and hope every
single day. I see it in the courage of ordinary citizens, like those who
rushed toward danger when the Twin Towers fell and our Pentagon burned. I
see it with military families who've lost loved ones -- and every time I
come away moved and inspired by their valor, their grit, their pride, and
their love of country. (Applause.) I see it when I exchange salutes with
the finest young men and women our country has ever known. (Applause.)
These Americans give me endless optimism about our future. And they have
made my presidency a joyous experience. (Applause.)

You know, since I've come to Washington, I've been reading a lot of
history. Laura notes it's probably because I'm making up for lost time.
(Laughter.) Over the past few years I've read three books on George
Washington -- or as I call him, the "original George W." (Laughter and
applause.)

It is interesting to me that they are still analyzing the record of our
first President. My attitude is if they're still analyzing Number 1, 43
doesn't need to worry about it. (Laughter and applause.) I'm not going to
be around to see the final history written on my administration. The truth
is that history's verdict takes time to reveal itself.

But we don't have to wait on history for one thing: in the year ahead, the
pundits, the so-called experts, commentator, analysts will offer more
gloomy predictions and more big government solutions. And when they do,
let us remember their record: this is a group that is seldom correct --
(laughter) -- but never in doubt. (Applause.)

You and I have seen that in our own time. Ronald Reagan was called a
"warmonger," "an amiable dunce," a movie actor detached from reality. Yet
within a few years after President Reagan left office, the Berlin Wall came
down, the Evil Empire collapsed, the Cold War was won. And over the years
a strange thing has happened. A lot of people who spent the 1980's
criticizing President Reagan now tell us they were with him all along.
(Laughter.)

You were with him all along. (Applause.) And over the past seven years,
you've been with me. I appreciate your support. (Applause.)

AUDIENCE: Four more years! Four more years!

THE PRESIDENT: Thank you, all. I appreciate the chance that you've given
me, help me get this opportunity to serve our country. It's been a
fantastic experience. (Applause.) I appreciate the countless phone calls
you've made. I appreciate the volunteer work you did in two tough
campaigns. I'll always -- always -- be grateful [to each of you] for
supporting our cause, for giving me a chance, and for loving our country.
I thank you for that. (Applause.)

I look forward to working with you this year. My energy is up, my spirit
is high, and I will finish strong. (Applause.) And in the meantime, we
will elect a new President. We've had good debates and soon we'll have a
nominee who will carry a conservative banner into this election and beyond.
Listen, the stakes in November are high. This is an important election.
Prosperity and peace are in the balance. So with confidence in our vision
and faith in our values, let us go forward, fight for victory, and keep the
White House in 2008. God bless you, and God bless America. (Applause.)